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Given that our income is generally seen as our biggest asset, it is extremely important that this asset is protected.
Have you ever wondered how you will be able to keep up with regular payments — including the mortgage, bills, childcare, food, entertainment, and transport — if you get injured or lose your job?
Income Protection is designed to address just this kind of thing: to replace some or most of your income in the event you are made redundant or unable to work.
It may be due to any of the following:
While some people believe that income protection is only necessary when you’re a high income earner, the reality is that income protection is a majorly underrated safeguard for any type of income earner.
Income Protection enables you to insure a maximum of 75% of your regular personal exertion income (including salary sacrificed superannuation contributions) against sickness or injury that prevents you from carrying out your work.
Much in the same way that you would receive your regular payments from work, your insurance cover would ensure you get regular payments until you’re well again so that you’re able to cover all your usual expenses. This is especially important if you have mortgage repayments or a family who depends on you as their primary source of income support.
An important consideration when choosing income protection insurance is the waiting period before benefits are paid out. A short waiting period is generally designed to suit those who could be in financial difficulties very quickly if their income stream stops.
Benefit payments will normally continue until you are able to return to work, subject to the maximum benefit periods. Typical benefit periods range from 1 year, 2 years, 5 years, to age 55, to age 60, to age 65.
Generally, premiums for this form of cover are able to be claimed as a Tax Deduction, however any insurance proceeds paid are subject to income tax. (You should consult your Accountant for formal confirmation.)
As all policies have key exclusions, it’s important to know what you’re getting (and not getting) as part of your premium.
Income protection is tailored to suit you and your situation. As such, there are many great options to choose from, but the complexity and range of products is why insurance brokers are often sought to provide clarification and guidance. You’ll want to make sure you’re not setting the bar for cover too low, while not paying too much on your premiums.
Not sure where to start?
Give us a call and we’ll help you work out whether income protection is right for you (or another type of insurance product might be more appropriate), and if you do need income protection, we’ll help you find the policy that’s best at the marketing-leading price.
